Aetna Seeks At Least $20 Million in Damages from Firm Responsible for HIV Status Data Breach

Aetna has taken legal action against an administrative support company over a July 2017 data breach that saw details of HIV medications visible through the clear plastic windows of envelopes in a mailing. Letters inside some of the envelopes had slipped, making the words ““when filling prescriptions for HIV medications” clearly visible to anyone who saw the envelopes.

The privacy breach was condemned by the Legal Action Center and AIDS Law Project of Pennsylvania, who along with Berger & Montague, P.C., filed a class action lawsuit against Aetna seeking damages for breach victims. In January, Aetna settled the lawsuit for $17.16 million. Last month, Aetna also settled violations of HIPAA and state laws for $1.15 million with the New York attorney general over the same breach.

The class action was only one of seven filed against the health insurer, and further fines from state attorneys general are to be expected. Several other attorneys general have opened investigations into the breach and may also determine that state laws have been violated.

The costs associated with the privacy breach are mounting and Aetna does not believe it should have to cover costs resulting from the (alleged) negligence of a third-party. The health insurer is seeking at least $20 million in damages from the administrative support company – Kurtzman Carson Consultants (KCC) – whose error resulted in the privacy breach.

In the lawsuit, Aetna claims the firm’s errors and omissions amounted to gross negligence and that KCC should have been aware that HIV medication information was detailed under the names and addresses of its plan members. Aetna claims no checks were performed to determine how much information was visible through the windows of the envelopes. Aetna also claims KCC did not communicate to Aetna that envelopes with clear plastic windows were being used for the mailing, and that Aetna’s lawyers were not consulted to give their approval of the mailing.

Aetna did try to resolve matters directly with KCC and sought indemnification; however, the talks failed prompting Aetna to take legal action.

Aetna is seeking a ‘hold harmless’ ruling which will see the Aetna protected from all liability, damages, payments and claims related to the mailing. With the outcome of other lawsuits pending, further investigations being conducted by state attorneys general, and a potential HIPAA breach penalty from the Department of Health and Human Services’ office for Civil Rights, the final cost of the mailing error is likely to be well in excess of $20 million.

In addition to seeking damages, Aetna is also trying to get KCC to return or destroy all confidential information provided to allow the firm to process the mailing.

KCC denies the allegations and its general counsel, Drake Foster, said Aetna’s claims are ‘demonstrably false.’

It is not only Aetna taking legal action against KCC over the mailing fiasco. A subsidiary of KCC has also filed a lawsuit against Aetna claiming the health insurer failed to protect the privacy of its plan members. The lawsuit was filed in Los Angeles federal court the day after Aetna’s lawsuit was filed in Philadelphia federal court.

In its lawsuit, KCC claims Aetna and its lawyers at Gibson Dunn & Crutcher were provided with samples of the letters and were aware that envelopes with clear plastic windows were being used. KCC claims the letters and the use of the envelopes were both approved.

KCC also claims the confidential information it received in order to send the mailing was not subject to a protection order, and neither was all of the information encrypted during transit to KCC via Gibson Dunn. KCC also claims Aetna shared more information than was necessary to send the mailing: A breach of the minimum necessary standard of HIPAA.

KCC is seeking a declaration that it is not responsible for any of the costs arising from the privacy breach and that all of its legal costs should be covered by Aetna.

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HIPAA Journal provides the most comprehensive coverage of HIPAA news anywhere online, in addition to independent advice about HIPAA compliance and the best practices to adopt to avoid data breaches, HIPAA violations and regulatory fines. HIPAA Journal's goal is to assist HIPAA-covered entities achieve and maintain compliance with state and federal regulations governing the use, storage and disclosure of PHI and PII.